Member Since: 12 Dec 2005
Location: The Gaff
Posts: 50977
No it's not a shock...I am aware that interest is applied to the whole amount including the balloon payment ...but are you saying that the balloon payment element of the whole sum is interest free then ? I don't think so.... it must surely retain an element of interest which I won't be paying.. Or am I losing my marbles 21 year LR veteran > D2 GS 2003 > D3 S 2006 > D3 HSE 2009 > D4 HSE 2013 > D4 HSE 2015 > D5 HSE 2018 > DS HSE R-Dynamic P300e 2021
25th Jun 2007 2:12 pm
DSL Keeper of the wheelie bin
Member Since: 11 May 2006
Location: Off again! :-)
Posts: 73038
Simon, didn't get any of those, just an invite to type in my PIN in the little box (twice!!!).
Unfortunately my mother is sailing off S Portugal having just sailed from the Azores so is not available for laundry duties. Still Mrs DSL is around and is quite handy with the old washing machine. I'll have to learn some day, s'pose!
PS Good to be back but off tomorrow for 4 weeks but might have Broadband installed up north (gods & BT be willing).
I am aware that interest is applied to the whole amount including the balloon payment
Then it isn't a shock to you - but may be to some less astute person....
DG wrote:
but are you saying that the balloon payment element of the whole sum is interest free then ? I don't think so....
No! I'm saying the opposite - you get nothing for nothing.....
DG wrote:
it must surely retain an element of interest which I won't be paying.. Or am I losing my marbles
I think perhaps you are.....
Which element of interest do you think you won't be paying The older I get, the more I realise that people confuse wrinkles for wisdom
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25th Jun 2007 2:53 pm
DG Site Moderator
Member Since: 12 Dec 2005
Location: The Gaff
Posts: 50977
I am paying the whole of the interest off the total amount in my 36 monthly payments and the balloon payment contains no element of the interest ...is that what you are saying? 21 year LR veteran > D2 GS 2003 > D3 S 2006 > D3 HSE 2009 > D4 HSE 2013 > D4 HSE 2015 > D5 HSE 2018 > DS HSE R-Dynamic P300e 2021
25th Jun 2007 3:09 pm
RPJ
Member Since: 05 Mar 2007
Location: Puzzleopolis
Posts: 473
Hmmmmm
Lease Purchase or Baloon Payments do indeed attract interest but it is not normally at the same rate as the difference,
for instance if you take a £40,000 Car and in 3 years you may have a balloon payment of £15,000 you put a £5000 deposit down you can get around 4% at the moment so therefore 20,000 x 4% + 800 per year intrest 2,400 the finance company may only charge one years interest on the balloon in this case £800
therfore on a 35k advance there would be £3200 of intrest on the £20,000 difference
this gives you a payment of 36x644.44 1x15,000 total payable £43,800
a traditional Hp agreement / personal loan would charge the interest at the full rate so on £35,000 over 5 years there would be 7000 interest a total payable ot £47,000 (783.33 per month)
now
if you refinanced the balloon payment of £15,000 at the same 4 % that would give you an additional £1200 interest still giving you a 5 year agreement and saving you £2000 in the process
total amount payable HP / Loan £47,000 onve 5 years
Balloon payment total over 5 years (re financing the balloon)£45,000
Thats why a lot of people Use a Balloon payment facility
PS
You also know exactly what your settlement is after 3 years (£15000)
where as with the Hp / Loan (even with a rebate of intrest) you are still looking at a £18250 settlement
Which would you choose and why?
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25th Jun 2007 3:18 pm
retired
Member Since: 18 Feb 2006
Location: Surrey
Posts: 158
You get a £40k car putting down, say, £5k. You are borrowing £35k for the duration of the deal. You WILL pay interest on the £35k. Sometimes the amount of capital owed is reduced by repayments lowering the interest total. No commercial organisation is going to lend you £35k for nothing. Zero or very low % finance deals, aka discount on the price of the car..
Advantage of PCP etc. is that you know and can therefore budget your costs over the life of the deal No nasty surprised like massive depreciation (except for the finance co).
Buy for cash or finance?
If you think you can invest your cash for a better return than the finance charges and you worry about higher than expected depreciation then go the finance route.
If you’re not bothered by depreciation risks, and don’t rate your investment skills, then go the cash route.
As has been said, when looking at any finance arrangement add up ALL the costs over the period of the deal, including up front payments / deposits, monthly charges, VAT, balloon payments etc. Not forgetting the weasel set up and admin charges.
25th Jun 2007 3:34 pm
DG Site Moderator
Member Since: 12 Dec 2005
Location: The Gaff
Posts: 50977
Ahh... I don't really know why I'm asking the question TBH ...I pay my monthly fee which I'm fairly happy with ...How can you put a offset value on the enjoyment I get from the motor....so I really shouldn't start contemplating interest calculations etc. I'll be a long time in the ground and anyway.... all motors cost a fortune... simple as 21 year LR veteran > D2 GS 2003 > D3 S 2006 > D3 HSE 2009 > D4 HSE 2013 > D4 HSE 2015 > D5 HSE 2018 > DS HSE R-Dynamic P300e 2021
Must be designed for hell of a good coffee..... The older I get, the more I realise that people confuse wrinkles for wisdom
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25th Jun 2007 4:29 pm
simon
Member Since: 11 Jan 2005
Location: Shropshire
Posts: 18296
DSL wrote:
(gods & BT be willing).
so you won't be having it then if both of them are involved
25th Jun 2007 4:55 pm
DSL Keeper of the wheelie bin
Member Since: 11 May 2006
Location: Off again! :-)
Posts: 73038
Actually that's not true I once bought a Renault 5 for £500 and a year later sold it at auction for £900! Mugs.
I find that very hard to believe.
You drove a Renault 5.
It must of been for your cleaner.
Nearly right Mat - It was for an ex girlfriend to travel to and from the station and leave in the carpark overnight sometimes.Loving the power of the TDV8!
25th Jun 2007 5:02 pm
DSL Keeper of the wheelie bin
Member Since: 11 May 2006
Location: Off again! :-)
Posts: 73038
Very Annoyed wrote:
It was for an ex girlfriend to travel to and from the station and leave in the carpark overnight sometimes.
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